ABSTRACT: A hallmark of the new economy is the ability of organizations to realize economic value from their collection of knowledge assets as well as their assets of infomiation, production distribution, and affiliation. Despite the competitive neces- sity of becoming a knowledge-based organization, senior managers have found it difficult to transfomi their firms through programs of knowledge management. This is particularly true if their organizations have long histories of process and a tradition of business success. This research examines the issue of effective knowledge man- agement from the perspective of organizational capabilities. This perspective sug- gests that a knowledge infrastructure consisting of technology, structure, and culture along with a knowledge process architecture of acquisition, conversion, application, and protection are essential organizational capabilities or "preconditions'" for effec- tive knowledge management. Through analysis of surveys collected from over 300 seniorexecutives. this research empirically modelsanduncoverskey aspects of these dimensions. The results provide a basis for understanding the competitive predisposi- tion of a firm as it enters a program of knowledge management.